In a 4-1 vote, the Dunedin City Commission gave developers with Pizzuti Builders LLC the okay to continue pursuing a plan that shifts the mixed-use project's heaviest focus away from commercial use and places greater emphasis on housing.

Conceptual plans now call for 138 upscale apartments, along with two restaurants and other ground-floor retail, on a vacant 4-acre tract at the corner of Main Street and Milwaukee Avenue.

The mixed-use complex, first approved in 2007, was initially to have mostly offices and retail anchored by an upscale grocery store. But the project faltered along with the recession, and developers have since quadrupled the amount of residential space in the project after the market for commercial tenants collapsed.

Planners say the new housing component would update Dunedin's current stock of older rental units, putting the city on pace to compete with Tampa, Clearwater, Palm Harbor and St. Petersburg for the attentions of working professionals.

Mease Dunedin Hospital nearby has also voiced a need for housing for its employees.

"Our (initial) approach was to make sure we're being part of the community and developing something that helps all of the businesses and residents here," Jim Russell, Pizzuti executive vice president and chief operating officer, told commissioners Thursday. "This is an option that we think meets all of those original goals."

Planners said the development would target middle- to upper-class singles and couples ages 25 to 39 not yet ready for the leap into homeownership, as well as baby boomers looking to downsize.

The roughly 12,000 square feet of ground-floor, on-site retail would cater to that demographic's living and entertainment needs, enhancing downtown's walkable nature and reducing the likelihood of traffic congestion.

Rent for the one- and two-bedroom units would likely range from $900 to $1,300 a month. The community would feature a clubhouse, business and fitness centers, pool, small car wash and pocket park.

Lucky Dill — a local deli chain that figures prominently in preliminary architectural drawings — has signed a letter of intent to locate in the Gateway project, and its representatives attended Thursday's meeting to show support.

According to a market analysis, the green-certified project would generate roughly 125 temporary construction jobs and, when completed, up to 35 permanent jobs and $140,000 a year in property tax revenues.

Most commissioners, while expressing a concern about adequate parking and green space and a desire for a bit more retail, said they support the new direction.

"I can see a slew of folks hanging out. There's an outside ambience that's not restricted to the apartments," said Vice Mayor Ron Barnette, adding that the project would add life to the eastern endof downtown. "This symbolizes the notion of the Gateway."

"I still have very serious reservations about moving from the (previous amount of) mixed use," she said. "I don't feel a compulsion to do something just so something will happen right now. My preference is to wait for that signature project."

Scales questioned the need for more apartments in town, which Mayor Dave Eggers said is there.

"We've got to get some depth of retail," Eggers said, "and I just don't see it unless we can get more folks living downtown."

Developers will continue meeting with stakeholders and fleshing out details in anticipation of a March closing date and final commission approval.

Keyonna Summers can be reached at ksummers@tampabay.com, (727) 445-4153 or on Twitter @KeyonnaSummers. To write a letter to the editor, go to tampabay.com/letters.